Iranian Rhetoric Sparks Tension

On Tuesday a senior Iranian official responded to U.S. economic sanctions by saying Iran would resist U.S. efforts by blocking all oil shipments through the Strait of Hormuz; a critical waterway responsible for the transportation of one-fifth of the world’s oil supply.

President Barack Obama is expected to sign legislation barring business transactions with Iran’s Central Bank, the dominant channel responsible for the country’s oil sales. This would increase the economic sanctions already placed on Iran and, hopefully, curtail the country’s ability to fund its nuclear program. Iran’s Vice-President, Mohammad-Reza Rahimi, retaliated by threatening, “If they impose sanctions on Iran’s oil exports, then even one drop of oil cannot flow from the Strait of Hormuz.”

An Iranian military personnel on Sea of Oman near the Strait of Hormuz in southern Iran, Wednesday.

While Rahimi maintains that Iran reserves the right to block the strait- the U.S. Fifth Fleet based in Bahrain opposes the Iranian position declaring, “any disruption will not be tolerated.” In light of the strategic importance of the waterway, an Obama administration official announced that the government has been committed to Gulf security for decades and will do whatever necessary to ensure the strait remains open.

However, despite threats, Iran most likely does not have the means to close down the strait, which is responsible for the passage of 15 million barrels of oil a day– the equivalent of 90% of Persian Gulf oil exports and 40% of global consumption. “At best, Iran can posture and potentially disrupt traffic for a short duration,” said Jean- Paul Rodrigue. However, this action would be detrimental for the current regime since countries such as China and Japan have a greater dependence on Persian Gulf oil than the United States.

While Iran’s threats may be little more than posturing, they still underline the fragile nature of the oil market, which can be easily swayed by rhetoric as well as international demand. Interruptions to the free trade of petroleum can potentially cause prices to spike while simultaneously undermining the recovery of western economies. How Iranian U.S. tensions over the freedom of the strait will pan out remains to be seen.